HomeMy WebLinkAboutHC Searchable Packet 08-13-2026CITY OF CUPERTINO
HOUSING COMMISSION
AGENDA
10185 North Stelling Road, Quinlan Conference Room and via Teleconference
Thursday, August 13, 2026
5:30 PM
Special Meeting
IN-PERSON AND TELECONFERENCE / PUBLIC PARTICIPATION INFORMATION
OPTIONS TO OBSERVE:
Members of the public wishing to observe the meeting may do so in one of the following
ways:
1) Attend in person at Quinlan Community Center, Conference Room, 10185 N. Stelling
Road.
2) Watch a live stream online at https://youtube.com/@cupertinocitycommission.
3) Attend in person at a remote Teleconference Location noticed pursuant to Gov. Code
54953(b)(2), which location, if noticed, would be stated on the cover page of this agenda.
OPTIONS TO PARTICIPATE AND COMMENT:
Members of the public wishing to address the Housing Commission may do so in the
following ways:
1) Appear in person at Quinlan Community Center, Conference Room, 10185 N. Stelling
Road:
a. During “Oral Communications”, the public may comment on matters not on the agenda,
and for agendized matters, the public may comment during the public comment period for
each agendized item.
b. Speakers are requested to complete a Speaker Card. While completion of Speaker Cards
is voluntary and not required to attend the meeting or provide comments, it is helpful for
the purposes of ensuring that all speakers are called upon.
c. Speakers must wait to be called and may begin speaking when recognized by the Chair.
d. Speakers are limited to three (3) minutes each. However, the Chair may reduce the
speaking time depending on the number of people who wish to speak on an item. A
speaker representing a group of 2 to 5 or more people who are present may have up to 2
minutes per group member, up to 10 minutes maximum.
e. Please note that due to cyber security concerns, speakers are not allowed to connect any
personal devices to any City equipment. However, speakers that wish to share a document
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Housing Commission Agenda August 13, 2026
(e.g. presentations, photographs or other documents) during oral comments may do so by:
i. E-mailing the document to housingcommission@cupertino.gov by 2:00 p.m. and staff will
advance the slides/share the documents during your oral comment.
2) Written communications as follows:
a. E-mail comments to housingcommission@cupertino.gov.
b. Regular mail or hand delivered addressed to the: Cupertino Housing Commission, City
Hall, 10300 Torre Avenue, Cupertino, CA 95014
c. Comments addressed to the Housing Commission received by 3:00 p.m. on the day of the
meeting will be included in written communications published and distributed before the
beginning of the meeting.
d. Comments addressed to the Housing Commission received after the 3:00 p.m. deadline,
but through the end of the Commission meeting, will be posted to the City’s website by the
end of the following business day.
3) Teleconference in one of the following ways:
a. Online via Zoom on an electronic device (Audio and Video): Speakers must register in
advance by clicking on the link below to access the meeting:
https://cityofcupertino.zoom.us/webinar/register/WN_kBcF6gJ2SuqznnTEb2UYUQ
i. Registrants will receive a confirmation email containing information about joining the
webinar.
ii. Speakers will be recognized by the name they use for registration. Once recognized,
speakers must click ‘unmute’ when prompted to speak.
iii. Please read the following instructions about technical compatibility carefully: One can
directly download the teleconference (Zoom) software or connect to the meeting in their
internet browser. If a browser is used, make sure the most current and up-to-date browser,
such as the following, is used: Chrome 30+, Firefox 27+, Microsoft Edge 12+, Safari 7+.
Certain functionality may be disabled in older browsers, including Internet Explorer.
b. By Phone (Audio only): No registration is required in advance and speakers may join the
meeting as follows:
i. Dial 669-900-6833 and enter WEBINAR ID: 869 4883 3564
ii. To “raise hand” to speak: Dial *9; When asked to unmute: Dial *6
iii. Speakers will be recognized to speak by the last four digits of their phone number.
c. Online via the teleconferencing device (Audio and Video) being used to provide access to
the meeting from a remote Teleconference Location noticed pursuant to Gov. Code 54953(b)
(2), which location, if noticed, would be stated on the cover page of this agenda.
i. Speakers are required to notify the City Clerk via email to cityclerk@cupertino.gov prior
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Housing Commission Agenda August 13, 2026
to noon on the date of the meeting during which they plan to participate and comment from
the remote location noticed to ensure the City Clerk is prepared to accept their comment.
ii. If the teleconferencing device malfunctions impeding access to the meeting from the
remote location, the speaker may alternatively participate via the other options for remote
participation provided above.
NOTICE AND CALL FOR A SPECIAL MEETING OF THE HOUSING COMMISSION
5 : 30 p.m. in 10185 North Stelling
Road, Quinlan Conference Room, Cupertino, California 95014 and via teleconference. Said
special meeting shall be for the purpose of conducting business on the subject matters
listed below under the heading, “Special Meeting."
SPECIAL MEETING
ROLL CALL
APPROVAL OF MINUTES
1.Subject: Approval of the May 28, 2026 Housing Commission Minutes.
Recommended Action: Approve the May 28, 2026 Housing Commission Minutes.
A - Draft Minutes
POSTPONEMENTS
ORAL COMMUNICATIONS
This portion of the meeting is reserved for persons wishing to address the Commission on any matter
within the jurisdiction of the Commission and not on the agenda. Speakers are limited to three (3)
minutes. In most cases, State law will prohibit the Commission from making any decisions with respect
to a matter not on the agenda.
CONSENT CALENDAR - None
OLD BUSINESS - None
NEW BUSINESS - None
STUDY SESSION
2.Subject: Study session to examine the City’s Below Market Rate (BMR) Housing
Mitigation Program Procedural Manual (Housing Mitigation Manual).
Recommended Action: Receive presentation on the Housing Mitigation Program
Manual, Inclusionary Housing Requirements, and BMR Fee.
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Housing Commission Agenda August 13, 2026
Staff Report
A - Below Market Rate Housing Mitigation Program Procedural Manual
STAFF AND COMMISSION REPORTS
ADJOURNMENT
In compliance with the Americans with Disabilities Act (ADA), anyone who is planning to attend this
meeting who is visually or hearing impaired or has any disability that needs special assistance should
call the City Clerk's Office at 408-777-3223, at least 48 hours in advance of the meeting to arrange for
assistance. In addition, upon request in advance by a person with a disability, meeting agendas and
writings distributed for the meeting that are public records will be made available in the appropriate
alternative format.
Any writings or documents provided to a majority of the members after publication of the agenda will
be made available for public inspection. Please contact the City Clerk’s Office in City Hall located at
10300 Torre Avenue, Cupertino, California 95014, during normal business hours.
IMPORTANT NOTICE: Please be advised that pursuant to Cupertino Municipal Code section
2.08.100 written communications sent to the City Council, Commissioners or staff concerning a matter
on the agenda are included as supplemental material to the agendized item. These written
communications are accessible to the public through the City website and kept in packet archives. Do
not include any personal or private information in written communications to the City that you do not
wish to make public, as written communications are considered public records and will be made
publicly available on the City website.
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CITY OF CUPERTINO
Agenda Item
Subject: Approval of the May 28, 2026 Housing Commission Minutes.
Approve the May 28, 2026 Housing Commission Minutes.
CITY OF CUPERTINO Printed on 8/7/2026Page 1 of 1
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DRAFT MINUTES
HOUSING COMMISSION
Thursday, May 28, 2026
At 5:30 p.m. Chair Usha Narayan called the regular Housing Commission meeting to order at the
Quinlan Conference Room, 10185 North Stelling Road and via teleconference.
ROLL CALL
Present: Chair Usha Narayan, Vice Chair Jasmine Jose and Commissioner Connie Cunningham.
Absent: Commissioners Sripathi and Xhindi.
APPROVAL OF MINUTES
1. Subject: Approval of the March 26, 2026 Housing Commission Minutes.
Recommended Action: Approve the March 26, 2026 Housing Commission Minutes.
MOTION: Cunningham moved and Jose seconded to approve the March 26, 2026, Housing
Commission Minutes. The motion passed with the following vote: Ayes: Narayan, Jose, and
Cunningham. Noes: None. Abstain: None. Absent: Sripathi and Xhindi.
POSTPONEMENTS – None.
ORAL COMMUNICATIONS – None.
OLD BUSINESS – None.
NEW BUSINESS
2. Subject: Fiscal Year (FY) 2026-27 Community Development Block Grant (CDBG) Draft
Annual Action Plan (AAP)
Recommended Action: Conduct Public Hearing; and
1. Approve the draft FY 2026-27 CDBG Annual Action Plan for submittal to HUD
Written Communications for this item included a staff presentation.
Assistant Housing Coordinator Evelin Meza gave a presentation.
Commissioners asked questions which staff responded to.
Chair Narayan opened the public comment period and the following people spoke:
• Deanne Everton representing Rebuilding Together Scotts Valley 6
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• Linda Hitchcock representing Live Oak Adult Day Services
• Georgia Bacil representing Senior Adults Legal Assistance
• Carole representing Project Sentinel
Chair Narayan closed the public comment period.
MOTION: Cunningham moved and Jose seconded to approve the draft FY 2026-27 CDBG
Annual Action Plan for submittal to HUD. The motion passed with the following vote:
Ayes: Narayan, Jose, and Cunningham. Noes: None. Abstain: None. Absent: Sripathi and
Xhindi.
3. Subject: Study session for strategies to meet affordable housing Regional Housing
Needs Allocation (RHNA) goals of the 2023-2031 Housing Element.
Recommended Action: Receive presentation on the status of the City’s progress on
meeting RHNA goals and suggest strategies for producing additional affordable
housing.
Written communications for this item included a staff presentation.
Senior Housing Coordinator Nicky Vu gave a presentation and introduced Assistant
Director of Community Development Luke Connolly.
Commissioners asked questions which staff responded to.
Chair Narayan opened the public comment period and, seeing no one, closed the public
comment period.
Commissioners made the following recommendations:
• Exploring higher-density housing development rather than relying on mid-
density/townhome projects.
• Focusing new housing on Stevens Creek and De Anza corridors.
• Exploring school properties and teacher/workforce housing opportunities.
• Encouraging affordable housing through incentives.
• Continuing to identify additional housing sites to meet state housing requirements.
MOTION: Cunningham moved and Jose seconded to close the item. The motion passed
with the following vote: Ayes: Narayan, Jose, Cunningham. Noes: None. Abstain: None.
Absent: Sripathi, Xhindi.
STAFF AND COMMISSION REPORTS –
Chair Narayan discussed the Mayor’s Meeting, and the homelessness workshop she attended
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Housing Commission May 28, 2026
Assistant Housing Coordinator Evelin Meza passed out Commissioner Handbooks.
Senior Housing Coordinator Nicky Vu provided updates about changes to the Commissioner
Handbook and follow up on additions to the work plan.
FUTURE AGENDA SETTING –
(Cunningham, Jose) Create a safe parking plan and determine how it can be included in the
regional parking plan, with potential City Council involvement.
ADJOURNMENT
At 7:14 p.m. Chair Narayan adjourned the regular Housing Commission Meeting.
Minutes prepared by:
Lindsay Nelson, Administrative Assistant
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CITY OF CUPERTINO
Agenda Item
Subject: Study session to examine the City’s Below Market Rate (BMR) Housing Mitigation Program
Procedural Manual (Housing Mitigation Manual).
Receive presentation on the Housing Mitigation Program Manual, Inclusionary Housing
Requirements, and BMR Fee.
CITY OF CUPERTINO Printed on 8/7/2026Page 1 of 1
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HOUSING COMMISSION STAFF REPORT
August 13, 2026
Subject
Study session to examine the City’s Below Market Rate (BMR) Housing Mitigation Program
Procedural Manual (Housing Mitigation Manual).
Recommended Action
Receive presentation on the Housing Mitigation Program Manual, Inclusionary Housing
Requirements, and BMR Fee.
Background
BMR Housing Mitigation Program
The City’s Housing Mitigation Program (BMR Program) was adopted in 1992 to generate
affordable housing. The ordinance requires developers to provide a specified number of
affordable owner-occupied and rental units within their proposed housing developments,
known as inclusionary affordable housing. BMR for-sale units are made available to median
and moderate-income households at 20% of the total development. BMR rental units are made
available to low and very low-income households at 15% of the total development. The general
accepted definitions of affordable housing at their various income levels are defined in the table
below:
Table 1 City of Cupertino BMR Inclusionary Housing Requirements
Income Level Area Median Income Level BMR Program Requirement
Acutely Low Income 0 – 15% AMI None
Extremely Low Income 15 – 30% AMI None
Very Low Income 30 – 50% AMI 9% of rental projects
Low Income 50 – 80% AMI 6% of rental projects
Median Income 80 – 100% AMI 10% of ownership projects
Moderate Income 100 – 120% AMI 10% of ownership projects
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The development of BMR units and collection of associated fees is governed by the Housing
Mitigation Manual (Attachment A). The units are managed in accordance with City Council
adopted guidelines, separately known as the Procedures Manual of Administering Deed
Restricted Affordable Housing Units (BMR Admin Manual), both of which are available for
view on the City’s Housing website (www.cupertino.org/housing).
Below Market Rate Affordable Housing Fund (BMR AHF)
The BMR Program also includes a fee that is collected upon issuance of the building permit of
applicable developments to be used to create a local affordable housing fund. Eligible uses for
this fund include: acquisition, construction, preservation, rehabilitation, operation subsidies,
BMR program administration, Fair Housing, and other similar affordable housing related
activities for low-income households. In 2025 and 2026, the Housing Commission voted in favor
of using the BMR AHF to support low-income housing projects such as the Mary Ave Villas and
the Wolfe Rd Educator Housing projects. It is critical to ensuring that the City is able to continue
to collect revenues to the fund that are commensurate to the need for affordable housing in
order to meet the City’s low income housing goals.
Regional Housing Needs Allocation (RHNA) Progress
The Regional Housing Needs Allocation (RHNA) is the City’s requirement to produce its fair
share of affordable housing at various income levels in accordance with state law. Progress
towards the RHNA goals of the 2023-2031 Housing Element has been slow due to pipeline
housing projects producing lower than expected density with few low and very low-income
units. As a result, it may be beneficial to examine the current inclusionary housing requirements
and assess the financial feasibility of increasing the minimum City requirement to produce
affordable housing at deeper affordability levels or at higher percentages of the development.
Housing Element
The City of Cupertino is committed to studying the Housing Mitigation Program and its current
fee schedule as a potential constraint and to update development fees to ensure that they
comply with state regulatory requirements to remain legally defensible. These items are
enumerated in the Housing Element as HE – 2.3.3 (Residential Housing Mitigation Program)
and HE – 2.3.9 (Review Impact Fees)
Discussion
In its current iteration, the BMR Fee consists of two components: the fractional fee and the
commercial linkage fee. Both fees are based on additional square footage of floor area proposed
by the development. The current BMR fee schedule is included in Attachment B.
Fractional Fee
The City’s inclusionary housing program often results in a non-whole number of required BMR
units. For example, a proposed rental project with a total of 22 units would be required to
provide 1.98 very low-income units and 1.32 low-income units. In scenarios where the fractional
portion of the BMR requirement is greater than 0.50, the developer is required to round up.
However, in scenarios where the fractional portion of the BMR requirement is lower than 0.50,
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the developer is required to pay an equivalent fee in-lieu of the additional unit. The formula to
calculate this fee is as follows:
In this example, if we assume the apartment building is 20,000 square feet, the formula for the
BMR Fractional Fee would be (20,000 x $29.94) / 1.32 x 0.32 or $145,163.63. Therefore, the BMR
requirement for this project would be to provide 2 very low-income units, 1 low-income unit,
and pay $145,163.63 to the BMR AHF fund as a fee.
Commercial Linkage Fee
The City’s BMR Fee also includes a commercial linkage component to ensure that economic and
job growth is able to be met with equivalent affordable housing supply. The fee schedule
contains several categories for non-residential development and separates them by the level of
wages the associated jobs created would pay. For example, an office/research park would
generate high income wages and thus would require a higher BMR Fee while a retail store
would generate low income wages and would have a lower BMR Fee. Current categories
include office/research, hotel, self-storage facility, warehouse, and commercial/retail. The
possibility of additional categories should be considered to anticipate future types of
commercial development that may be proposed.
Request for Proposals (RFP)
In July 2026, staff created and opened an RFP to select a consultant to complete the nexus study
and provide a proposal for an updated inclusionary housing requirement and schedule of fees
for the BMR program. The goal of the update is to promote the City’s ability to meet its
remaining RHNA targets in affordable housing production while remaining economically
viable in the current development market. The proposal must also be legally defensible
according to applicable state law. In addition to updating the inclusionary housing requirement
and the two existing components of the BMR Fee, this update will include the addition for a
complete fee-out option for developers in-lieu of providing inclusionary units, which is
required by Government Code Section 65850.
CEQA Impact
None
Sustainability Impact
None
Fiscal Impact
None
[(Gross Floor Area x Fee Amount per SF by Development Type) / Below Market Rate
Inclusionary Requirement (15% or 20% of total units provided)] x Remaining Fraction of
BMR Requirement
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Next Steps
This is the first of multiple public hearings. A future public hearing of the Housing Commission
will be held to recommend approval of a new inclusionary housing requirement and BMR fee
schedule. The recommendation will be proposed for approval at a meeting of the City Council
with a date and time to follow.
Prepared by: Nicky Vu, Senior Housing Coordinator
Approved for Submission by: Luke Connolly, Acting Director of Community
Development
Attachments:
A – Below Market Rate Housing Mitigation Program Procedural Manual
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Below Market Rate (BMR) Housing Mitigation Program
Procedural Manual
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Amended and Adopted by City Council
July 2, 2024
Resolution No. 24-067
CITY OF CUPERTINO HOUSING DIVISION
DEPARTMENT OF COMMUNITY DEVELOPMENT
10300 TORRE AVENUE
CUPERTINO, CA 95014
VOICE: (408)777-3251
FAX: (408)777-3330
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Table of Contents
1 Introduction ........................................................................................................................................ 1
2 Housing Mitigation Program ........................................................................................................... 2
2.1 Applicability ................................................................................................................................. 2
2.2 Affordable Housing Mitigation Fee .............................................................................................. 2
2.2.1 Payment ..................................................................................................................................... 2
2.2.2 Permitted Use of Fees ........................................................................................................... 3
2.3 Affordable Housing Units ............................................................................................................ 3
2.3.1 Minimum Affordability of Residential Units ....................................................................... 3
2.3.2 Fractional Units ................................................................................................................... 4
2.3.3 Affordable Housing Plan ...................................................................................................... 5
2.3.4 BMR Unit Design Requirements ............................................................................................ 5
2.3.5 Initial Maximum Sales Prices and Rents of BMR Units ..................................................... 5
2.3.6 Terms of Affordability .......................................................................................................... 7
2.3.7 Agreement between Developer and City............................................................................... 7
3 Mitigation Requirements of Non-Residential Developments ...................................................... 9
3.1 Requirements ................................................................................................................................ 9
3.2 Non-Residential Fee Calculations ................................................................................................ 9
4 Mitigation Requirements of Ownership Residential Developments ....................................... 10
4.1 Requirements ............................................................................................................................. 10
4.2 BMR Requirements for Developments with One (1) to Four (4) Units .................................... 10
4.3 BMR Requirements for Developments with Five (5) or more Units ......................................... 10
5 Mitigation Requirements of Rental Residential Developments ................................................ 11
5.1 Requirements ............................................................................................................................. 11
5.2 Residential Rental Impact Fee Calculations .............................................................................. 11
6 Mitigation Requirements for Mixed-Use Projects ...................................................................... 12
6.1 Requirements ............................................................................................................................. 12
6.2 Mixed-Use Mitigation Fee Calculations .................................................................................... 12
7 Alternatives to BMR Requirements .............................................................................................. 13
7.1 Options for Alternatives ............................................................................................................ 13
7.2 Housing Plan for Alternative BMR Requirements ................................................................... 13
8 City Incentives ................................................................................................................................ 15
8.1 Density Bonus ........................................................................................................................... 15
8.2 Financial Assistance .................................................................................................................. 15
8.3 Fee Waivers ............................................................................................................................... 15
8.4 Priority Processing .................................................................................................................... 15
8.5 City Certification of Buyer and Tenant Eligibility .................................................................... 15
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BMR HOUSING MITIGATION PROGRAM
PROCEDURAL MANUAL
1. Introduction
In accordance with the City of Cupertino’s Housing Element, all new residential and/or non-
residential developments are required to help mitigate project-related impacts on affordable
housing needs.
As required by Section 19.172.030 of the Cupertino Municipal Code, this manual establishes
procedures for implementing the affordable housing mitigation provisions of the City’s Below
Market Rate (BMR) Housing Mitigation Program.
A separate manual, the “Policy and Procedures Manual for Administering Deed Restricted
Affordable Housing Units” establishes the procedures for the on-going administration of the
inventory of BMR units created by the City’s Residential Housing Mitigation Program. The City
or its agent will administer the programs.
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BMR HOUSING MITIGATION PROGRAM
PROCEDURAL MANUAL
2 Housing Mitigation Program
2.1 Applicability
A. The Non-residential and Residential Housing Mitigation Programs are applicable to all
non-residential and/or residential projects that result in an increase of gross floor area
(for fee-based program) and/or the number of net new units in a development (for
unit-based program) with the following exemptions:
1. New gross floor area that is replacing demolished or destroyed gross floor area;
2. Existing space that is being rehabilitated, but not enlarged;
3. Governmental buildings;
4. Institutional buildings;
5. Demolition and rebuild of or additions to existing single family homes;
6. Accessory dwelling units and
7. Parking garages (this exemption does not apply to commercial paid-parking garages).
The program has two components; a fee-based program for certain types of development
and a unit-based program for other types of development.
2.2 Affordable Housing Mitigation Fee
A. Non-residential and residential affordable housing mitigation fee amounts are set by the City
Council for developments as outlined in Chapters 3, 4 and 5.
B. The Affordable Housing Mitigation Fee may not exceed the cost of mitigating the impact of
the type of development on the need for affordable housing as supported by nexus studies
that may be commissioned from time to time by the City Council.
C. The fee shall be adjusted annually using the Consumer Price Index (all items index for the
San Francisco Bay Area).
D. The City will publish the most recently adopted housing mitigation fees annually in the fee
schedule.
2.2.1 Payment
A. Fees shall be based on the fee schedule in effect on the date that the construction
permit is issued by the City and shall be due and payable on the date of issuance
of construction permits, unless otherwise required by state law.
B. In the event that the applicant is allowed to defer payment of fees and is issued
construction permits, the fees shall be due and payable according to the fee
schedule in effect on the date of fee payment, prior to first occupancy of the
project, unless a negotiated Development Agreement allows otherwise.
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BMR HOUSING MITIGATION PROGRAM
PROCEDURAL MANUAL
C. All fees shall be deposited into the City’s Below Market Rate (BMR) Affordable
Housing Fund (AHF).
2.2.2 Permitted Use of Fees
A. Affordable housing mitigation fees deposited into the BMR AHF shall only be
used for the provision of affordable housing in Cupertino.
B. The options for use of the fee revenue include, but are not limited to the following:
1. BMR Program Administration
2. Land Acquisition
3. New Construction
4. Acquisition and/or rehabilitation of buildings for permanent affordability
5. Preserving “at-risk” BMR Units
6. Substantial Rehabilitation
7. Rental Operating Subsidies
8. Down Payment Assistance
9. Direct gap financing
10. Fair Housing
C. A portion of the BMR AHF will be targeted to benefit the following groups, to the
extent that these target populations are found, to be consistent with the needs
identified in the nexus study:
1. Extremely low-income households and
2. Persons with special needs (such as the elderly, victims of domestic violence,
and the disabled, including persons with developmental disabilities).
2.3 Affordable Housing Units
Affordable housing unit requirements are set by the City Council.
2.3.1 Minimum Affordability of Residential Units
A. When a development provides Ownership Below-Market-Rate (BMR) units, the
affordability requirements for units shall be as follows:
1. Fifty percent (50%) of BMR units as median-income and fifty percent (50%)
as moderate-income.
2. If a single BMR unit is provided, it shall be designated for median income.
B. When a development proposes to provide on-site Rental BMR units, the
affordability requirements for units shall be as follows:
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PROCEDURAL MANUAL
1. Sixty percent (60%) of BMR units as very low-income and forty percent (40%)
as low-income.
2. If a single BMR unit is provided, it shall be designated for very-low income.
C. When the calculations in A or B (above) result in an odd number, the “extra unit”
shall benefit the median-income group for Ownership BMR units and the very
low-income group for on-site Rental BMR units.
Affordability of Units – Example
Ownership BMR Units Rental BMR Units*
# of BMR Units
Required*
# of Median
Income Units
# of Moderate
Income Units
# of Very-Low
Income Units
# of Low Income
Units
1 1 0 1 0
4 2 2 2 2
9 5 ** 4 5 4***
* See Chapter 7 for BMR rental units.
** See Section 2.3.1 for extra unit
*** See Section 2.3.2 for fractional units
2.3.2 Fractional Units
A. When computations for the number of required BMR units result in fractional
units, the developer’s obligations shall be as follows:
1. 0.00 - 0.49 of a unit: Pay an in-lieu fee for the fractional unit in compliance
with Section 2.2.1.
2. 0.50 - 0.99 of a unit: Round up and provide one additional BMR unit.
B. Determination of the in-lieu fee for fractional units:
1. Determine the total Housing Mitigation Fee for the entire project (as though
impact fees will be paid rather than on-site units provided.) The Housing
Mitigation Fee for the project is calculated by multiplying the gross floor area
of the project by the applicable affordable housing mitigation fee based on the
fee schedule in effect.
2. Determine the Housing Mitigation Fee per affordable unit by dividing the
total Housing Mitigation Fee as calculated in B1 (see above) by the total
number of required affordable units (even if fractional).
3. Determine the in-lieu fee owed for the fractional unit by multiplying the
Housing Mitigation Fee per affordable unit as calculated in B3 (see above) by
the fractional amount.
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BMR HOUSING MITIGATION PROGRAM
PROCEDURAL MANUAL
Example
Residential project: 42 units; BMR requirement = 8.4 units
Gross Floor Area/home = 3,000 sq. ft. (excluding exemptions)
On-site requirement = 8 BMR units; In-lieu fee requirement = 0.4 unit
Affordable housing mitigation fee = $20/sq. ft (assumed)
In-lieu fee calculated as follows:
Step 1: Total Housing Mitigation Fee = 42 units x 3,000 sq. ft. x $20/sq. ft. = $2,520,000.
Step 2: Impact fee per affordable unit = $2,520,000 ÷ 8.4 BMR units = $300,000 per BMR unit.
Step 3: In-lieu fractional impact fee = $300,000 x 0.4 = $120,000.
Note: The fee calculation and estimates above are examples only and may not reflect actual fees.
2.3.3 Affordable Housing Plan
A. For projects that propose BMR units, the applicant shall submit an “Affordable
Housing Plan,” describing how a development project will comply with the
City's BMR requirements, with the application for the first approval of the project.
B. The plan shall identify the BMR units or parcels in the development.
C. If alternatives are proposed in compliance with Chapter 7, the plan shall identify
how the proposal is equivalent to the BMR requirements of Chapter 4.
D. An applicant may submit a request for a waiver or modification of the City's BMR
requirements concurrently with the application for the first approval of the project,
based upon a showing that applying the requirements would result in an
unconstitutional taking of property or would result in any other unconstitutional
result. The request must set forth in detail the factual and legal basis for the claim.
The request for the waiver or modification will be processed concurrently with the
affordable housing plan and all other permits required for the project.
E. The decision-making body with authority to approve the project shall review and
may approve, conditionally approve, or deny the Affordable Housing Plan.
However, the City Council shall review and may approve, conditionally approve,
or deny an Affordable Housing Plan that proposes alternatives to the BMR
requirements of Chapter 3, 4, and/or 5 or that requests a waiver or modification of
the BMR requirements. The waiver or modification may be approved only to the
extent necessary to avoid an unconstitutional result, based on the City Attorney's
legal advice, after adoption of written findings based on legal analysis and
substantial evidence. If a waiver or modification is granted, any change in the
project will invalidate the waiver or modification, and a new application will be
required for a waiver or modification.
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2.3.4 BMR Unit Design Requirements
A. BMR units shall be comparable to market rate units in terms of unit type, number
of bedrooms per unit, quality of exterior appearance and overall quality of
construction.
B. BMR unit size should be generally representative of the unit sizes within the
market-rate portion of residential project.
C. Interior features and finishes in affordable units shall be durable, of good quality
and consistent with contemporary standards for new housing.
D. The BMR units shall be dispersed throughout the residential project.
2.3.5 Initial Maximum Sales Prices and Rents of BMR Units
A. For Sale BMR Units
The maximum initial sales prices of BMR units will be determined by the City, or
its agent, based on the maximum affordable housing cost provisions of Section
50052.5 of the California Health and Safety Code and the most recent published
State Department of Housing and Community Development (HCD) income limits,
as follows:
1. Determine the annual median income, based on HCD income tables for Santa
Clara County, for a household size that is one person more than the number
of bedrooms in the BMR unit.
2. Multiply the median income by the following:
a. 110% for a BMR moderate income unit; and
b. 90% for a BMR median income unit.
3. Obtain the maximum annual housing allowance by multiplying the annual
income from Step 2 above by 0.35 (moderate-income) or 0.30 (median- income).
4. Obtain the maximum monthly housing allowance by dividing the annual
housing allowance by 12.
5. Determine the maximum mortgage that can be financed:
a. The City’s BMR ownership program requires a minimum borrower down
payment of 5%; therefore, the first mortgage loan amount will be calculated
at a 95% loan-to-value (LTV) ratio. In order to determine the primary
mortgage interest rate at least two City BMR approved lenders will be
contacted for a 30 year fully amortized fixed-rate primary home mortgage
interest rate quote based on specific BMR sales price scenarios. Either use
the average of the BMR lender interest rate quotes or 0.5% higher interest
rate than interest rate quotes.
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b. Determine the maximum home mortgage that can be financed based on
the principal and interest (P&I) mortgage payment as determined by the
interest rate in Step 5a. The total monthly housing expense shall include
the P&I mortgage payment, property taxes, mortgage insurance (if
applicable), homeowner’s insurance, and homeowner’s association (HOA)
fees.
c. Determine the maximum initial BMR unit sales price by adding up the total
monthly housing expense as described in Step 5b. The proposed total
monthly housing expenses cannot exceed the maximum monthly housing
allowance as described in step 4.
B. Rental BMR Units
1. The maximum initial rents for BMR units are set at a level affordable to low and
very low-income households. The maximum initial rents for BMR units shall be
determined based on:
a. Maximum housing allowance of 30% of gross income for a household size of
one person more than the number of bedrooms in the rental BMR unit, and
b. For low income units, assume household income at 60% of median- income,
and for very low-income units, assume household income at 50% of median-
income.
2. The maximum rents for BMR units and maximum household income limits are
revised annually following the annual publication of HCD income limits for Santa
Clara County.
3. "Rent" includes monthly rent paid to the property owner, utilities, and all fees for
parking and other housing services. A reasonable utility allowance, as determined
by the tables published annually by the Santa Clara County Housing Authority,
shall be deducted from the maximum monthly rents for those utilities paid by the
tenant.
4. Where affordable housing units are developed with other state or federal housing
program assistance, the rental price requirements of the state or federal housing
program will supersede the price limitations of these Guidelines where they are
more stringent.
2.3.6 Terms of Affordability
Affordable housing is subject to recorded covenants that require the units be
occupied at prices/rents that are affordable to Low to Moderate-income households
for a period of not less than 99 years from the date of first occupancy of the unit.
These deed restrictions shall run with the land and will remain in effect for
subsequent buyers and owners.
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2.3.7 Agreement between Developer and City
A. Prior to recordation of a final or parcel map or issuance of any building permit,
whichever is earlier, an affordable housing agreement shall be recorded against
the property. The affordable housing agreement shall include, but not be limited
to, the following:
1. Total number of BMR units, type, location, square footage and number of
bedrooms, and construction scheduling of market-rate and BMR units;
2. Provisions to ensure concurrent construction and completion of BMR and
market-rate units;
3. Affordability levels for each BMR unit;
4. Provisions for income certification and screening of potential occupants of
BMR units;
5. Resale control mechanisms;
6. Financing of ongoing administrative and monitoring costs (City and private);
7. If applicable, a relocation plan for tenants of rental BMR units upon sale of
units or redevelopment of site; and
8. Other reasonably required provisions to implement the Affordable Housing
Plan.
B. Agreements for projects that provide alternatives to BMR requirements shall
additionally contain provisions to ensure that the alternative requirements are
completed prior to occupancy of the market rate development.
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3 Mitigation Requirements of Non-Residential Developments
3.1 Requirements
A. All non-residential projects that result in a net increase in gross floor area shall be
required to pay the Affordable Housing Mitigation Fee in compliance with Section 2.2 of
this manual.
B. Projects may propose alternatives to the BMR requirement in A (see above) in compliance
with Chapter 7 of this manual.
3.2 Non-Residential Fee Calculations
Non-residential affordable housing mitigation fees shall be calculated by multiplying the
increase in gross square footage (SF) by the applicable non-residential affordable housing
mitigation fee.
Example Calculation of Non-Residential Affordable Housing Mitigation Fee
Scenario Applicable SF Fee Amount per SF of
Gross Floor Area †Total Fee
Demolish and rebuild retail project:
Existing Gross sq. ft. = 10,000 sq. ft.;
5,000 sq. ft. $10.00/sq. ft. $50,000
New construction:
Commercial office = 50,000 sq. ft.;
Police substation = 1,500 sq. ft.*;
50,000 sq. ft. $20.00/sq. ft. $1,000,000
Note: * Exempt
† The fee amounts above are examples only and may not reflect actual fee amounts.
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4 Mitigation Requirements of Ownership Residential Developments
4.1 Requirements
A. An ownership residential development is any residential development that includes the
approval of a subdivision map and creates one or more units that may be sold
individually. It also includes a condominium conversion.
B. All ownership projects that result in the net increase in units shall be required to
provide BMR mitigations in compliance with Section 4.2 and 4.3.
C. Projects that propose alternatives to the BMR requirement in A (see above) shall do so
in compliance with Chapter 7 of this manual.
4.2 BMR Requirements for Developments with One (1) to Four (4) Units
New ownership projects adding one to four units may either pay the Affordable Housing
Mitigation Fee in compliance with Section 2.2 or provide one BMR unit in compliance with
Section 2.3.
Example Calculation of Ownership Affordable Housing Mitigation Fee (1-6 units)
Scenario Applicable
SF
Fee Amount per SF of
Gross Floor Area †Total Fee
New single family home or townhome:
Gross sq. ft. = 3,025 sq. ft.;
Garage = 425 sq. ft.*
2,600 sq. ft. $20.00/sq. ft. $52,000
New 4 unit multifamily ownership development:
Gross sq. ft. = 10,000 sq. ft;
Garage = 4,000 sq. ft.*
6,000 sq. ft. $20.00/sq. ft. $120,000
Note: * Exempt;
† The fee amounts above are examples only and may not reflect actual fee amounts.
4.3 BMR Requirements for Developments with Five (5) or more Units
New ownership projects with five or more units or lots shall provide at least 20% of the
units or lots as BMR ownership units or lots per Section 2.3.
Example Calculation of Ownership Affordable Housing Mitigation Fee (7+ units)
Scenario BMR requirement BMR
units Fees
New 24-unit ownership townhome project 24 x 20% = 4.8 units 5 units* N/A
New 46-unit condominium development 46 x 20% = 9.2 units 9 units Pay fee for 0.2 unit
per Section 2.3.2
Note: * Additional unit if over 0.49 per Section 2.3.2;
† The fee amounts above are examples only and may not reflect actual fee amounts.
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5 Mitigation Requirements of Rental Residential Developments
5.1 Requirements
A.A rental residential development is any residential development that creates new
dwelling units that cannot be sold individually.
B.All rental projects that result in the net increase in units shall be required to provide
BMR mitigations in compliance with Section 5.2 and 5.3.
C.Projects that propose alternatives to the BMR requirement in A (see above) shall do so
in compliance with Chapter 7 of this manual.
5.2 BMR Requirements for Developments with One (1) to Four (4) Units
New rental projects adding one to four units may either pay the Affordable Housing
Mitigation Fee in compliance with Section 2.2 or provide one BMR unit in compliance
with Section 2.3.
Example Calculation of Residential Affordable Housing Impact Fee (Rental Projects)
Scenario Fee Amount per SF of
Gross Floor Area †Total Fee
New 4 unit multifamily rental development:
Gross livable sq. ft. = 5,000 sq. ft; $20.00/sq. ft. $100,000
Note: † The fee amounts above are examples only and may not reflect actual fee amounts
5.3 BMR Requirements for Developments with Five (5) or more Units
New rental projects with five or more units shall provide at least 15% of the units or
lots as BMR rental units or lots per Section 2.3.
Example Calculation of Rental Affordable Housing Mitigation Fee (7+ units)
Scenario BMR requirement BMR
units Fees
New 25-unit rental project 25 x 15% = 3.75 units 4 units* NA
New 45-unit rental project 45 x 15% = 8.25 units 8 units Pay fee for 0.25 unit
Note: * Additional unit if over 0.49 per Section 2.3.2;
† The fee amounts above are examples only and may not reflect actual fee amounts.
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6 Mitigation Requirements for Mixed-Use Projects
6.1 Requirements
A. All new and redeveloped mixed-use developments shall comply with requirements in:
1. Chapter 3 for non-residential components; and/or
2. Chapter 4 for residential ownership components; and/or
3. Chapter 5 for residential rental components.
B. Projects that propose alternatives to the BMR requirements in A (see above) shall do so
in compliance with Chapter 7 of this manual.
6.2 Mixed-Use Mitigation Fee Calculations
Example Calculation of Residential Affordable Housing Mitigation Fee
Scenario Applicable SF Fee Amount per SF of Gross
Floor Area †
Total
Mitigation
New mixed-use project:
Res. condos (2 units) = 3,000 sq. ft.;
Office = 5,000 sq. ft.;
Parking Garage = 850 sq. ft.*
Res. = 3,000 sq. ft.
Off. = 5,000 sq. ft. Residential Ownership fee =
$20.00/sq. ft.
Residential Rental fee =
$25.00/sq. ft.
Residential Rental BMR Units
= 15%
Residential Ownership BMR
units = 20%
Office fee = $20.00/sq. ft.
Retail & Hotel fee = $10/sq. ft.
$160,000
New mixed-use project:
Res. Apartments (4 units) = 3,200 sq. ft.;
Retail = 3,500 sq. ft.
Parking Garage = 0 sq. ft.
Res. = 3,200 sq. ft.
Retail = 3,500 sq. ft. $115,000
New mixed-use project:
Res. rental (120 units) = 110,000 sq. ft.;
Retail space = 50,000 sq. ft.;
Hotel (160 rooms) = 50,000 sq. ft.;
Parking Garage = 150,000 sq. ft.*
Res. = 120 units.
Retail = 50,000 sq.
ft.
Hotel = 50,000 sq. ft.
18 units
plus
$1,000,000
New mixed-use project:
Res. Condos (120 units) = 110,000 sq. ft.;
Retail space = 10,000 sq. ft.;
Office = 25,000 sq. ft.;
Parking Garage = 60,000 sq. ft.*
Res. = 120 units
Retail = 10,000 sq. ft.
Office = 25,000 sq. ft.
24 units
plus
$600,000
Note: * Exempt
† The fee amounts above are examples only and may not reflect actual fee amounts.
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7 Alternatives to BMR Requirements
The Council may, at its discretion, approve other alternatives to Chapters 3, 4, 5 and 6. The
alternatives proposed shall be equivalent to the applicable BMR requirements for the project.
7.1 Options for Alternatives
A. Options for Alternatives to BMR Requirements may include, but are not limited to the
following:
1. On-site BMR rental units where ownership units or a fee is required.
2. Purchase of off-site units to be dedicated and/or rehabilitated as for-sale or rental BMR
units per Section 2.3.
3. Development of off-site units to be dedicated as for-sale or rental BMR units per
Section 2.3.
4. Land for development of affordable housing.
B. The Council may approve, conditionally approve, or deny a proposal to provide
alternatives to BMR requirements.
7.2 Housing Plan for Alternative BMR Requirements
A. If alternatives to BMR requirements are proposed, an Affordable Housing Plan shall, in
addition to the requirements of Section 2.3.3:
1. Demonstrate equivalency of the alternative to BMR requirements
2. Rental BMR units shall be affordable as shown in Section 2.3.1.
3. If off-site development of BMR units is proposed:
a. Identify the proposed site and demonstrate site control;
b. Identify the developer for the proposed off-site BMR project;
c. If not appropriately zoned, demonstrate compatibility of the proposed project with
adjacent uses;
d. Provide a financial pro forma identifying all financing sources to fully fund an
affordable project; and
e. Provide a plan for completion of the off-site BMR development, prior to
approval of the market-rate project. The Affordable Housing Plan shall
additionally include, but not be limited to, the following items prior to any
parcel or final map or issuance of building permits for the market-rate project,
whichever is earlier:
i. Transfer of property to BMR developer;
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ii. Recordation of a city-approved deed restriction against the property;
iii. Discretionary approvals from the City for the proposed BMR development;
iv. Committed financing for the project in an escrow account or an account
approved by the City with joint signatory authority with the City and firm
commitments from lenders or other sources of financing for the project; and
v. A contingency plan, including a schedule o f timing and agreement to
provide the required on-site BMR mitigation, in the event the off-site BMR
units are not completed prior to completion of the market rate development.
B. The City may retain a consultant, at the developer's expense, to review the reasonableness
of the proposal and the submitted pro-forma.
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8 City Incentives
8.1 Density Bonus
To maximize housing opportunity and partially assist the developer by reducing or
eliminating the development cost for the affordable units, a density bonus consistent with
Chapter 19.56 of the Cupertino Municipal Code, Density Bonus, will be permitted.
8.2 Financial Assistance
If the project qualifies, the City may choose to utilize BMR AHF monies to create a
greater percentage of affordable units at greater affordability than otherwise required (very
low and low income in for-sale developments; extremely low and very low in rental
developments).
8.3 Fee Waivers
The City may consider waiving park dedication and construction tax fees for affordable units.
8.4 Priority Processing
The City shall, wherever possible, consider expediting the processing of developments with
affordable units.
8.5 City Certification of Buyer and Tenant Eligibility
The City or its agent shall certify the eligibility of all proposed buyers and renters of BMR
units.
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